Key perspective
Private mortgages are generally short-term, property-secured solutions used when timing, credit, income documentation or property characteristics do not fit conventional lending. The quality of the exit strategy is often as important as the initial approval.
When private financing may be considered
Private financing may be considered for mortgage arrears, urgent closings, credit recovery, appraisal shortfalls, construction, business-purpose equity takeouts or temporary income-documentation problems. It should solve a defined problem rather than postpone one without a realistic plan.
How private mortgage costs are structured
The total cost can include interest, lender fees, brokerage fees, appraisal, title insurance and legal expenses for both the borrower and lender. Borrowers should compare the total cash required and the expected duration, not only the stated interest rate.
Exit strategy
A credible exit may involve sale, conventional refinance, improved credit, completion of construction, stabilization of income or repayment from another verifiable source. The plan should include timing, contingencies and the cost of extensions if the exit is delayed.
Related HopeWell resources
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